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Other voices: Mayo deal stacks up well by comparison

Pioneer Press

Posted:
04/27/2013 12:01:00 AM CDT

Updated:
04/27/2013 04:15:55 PM CDT

ROCHESTER, Minn. -- In what some people might deem an ironic twist, Rep. Ann Lenczewski, the DFL chair of the House Taxes Committee who has been a thorn in the side of the Destination Medical Center initiative, found herself on the defensive recently regarding tax breaks and incentives for an Illinois-based pharmaceutical company.

It's a complicated situation -- but then again, things tend to get complicated when government leaders take vows of secrecy while dangling incentives in front of out-of-state businesses.

Here are the basics:

-- A large manufacturing plant in Brooklyn Park has sat empty since 2009. It needs a tenant, and Minnesota needs new jobs.

-- Gov. Dayton and several other high-ranking officials sent a letter in February to a consulting firm that works for the Illinois company. The letter indicated Minnesota would consider tax exemptions, forgivable loans, per-job tax credits, working training grants and special assistance on road, sewer and water construction to the company that was considering the Brooklyn Park site. This letter, however, wasn't released to the public because the Dayton administration, at the urging of Brooklyn Park officials, agreed to conceal the company's identity. Even in the letter itself, the deal is code-named Project Fern.

-- These tax breaks, however, must be authorized by the Legislature. That resulted in a strange situation, as some of the lawmakers who wrote or sponsored legislation authorizing up to $15.

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4 million for Project Fern didn't know the company's identity. Lenczewski (through no fault of her own) was one of them.

Well, the air finally was cleared. With rumors swirling and frustration building about the confidentiality agreement, Dayton's office released the February letter, and we now know Baxter International, a pharmaceutical giant with $14 billion in annual sales, might bring 200 good-paying jobs to the Minneapolis suburbs.

We have nothing against Baxter, and we certainly hope the company brings an operation to Brooklyn Park. Nor do we take issue with the price tag. Minnesota could use 200 new jobs with salaries of $70K or more, and if they come with a start-up price tag of $15.4 million, so be it.

Of course, if Baxter could bring 2,000 jobs for $154 million in state subsidies, that would be better, right? Or how about 20,000 jobs for $1.54 billion in state subsidies?

Oh, wait. The Destination Medical Center initiative -- we'll use conservative numbers here -- is predicted to provide at least 25,000 jobs -- perhaps as many as 40,000 -- for about $500 million in state subsidies. Seen in that light, DMC seems like a bargain, doesn't it?

Before anyone argues that we're making an unfair comparison, be aware that Lenczewski didn't hesitate to bring up DMC while discussing the Baxter deal. Once she actually learned the identity of the company (and as legislators on both sides of the aisle started asking tough questions about the subsidies), she became defensive. "They're not extraordinary tax benefits. This is nothing like the Mayo or the Mall of America or anything like that. What it is, is sort of your vanilla tax benefits."

Vanilla? Really? Does a company as large as Baxter really need $5 million in forgivable loans?

We asked Rep. Kim Norton about these subsidies, and she refused to criticize them or Lenczewski.

"I don't fault companies for coming to the Legislature and asking for subsidies to come here," she said. "That happens every single year, and sometimes subsidies are required. But also, I know that one of the most important things we can do is to grow jobs with businesses that are already here. That's a safe investment, a better investment. Mayo Clinic has come out and done this with great transparency."

Full marks to Norton for her tact, but we'll be more blunt: Mayo Clinic is a known commodity in Minnesota with an amazing track record. During a recent town hall meeting on DMC, Dr. Bradly Narr pointed out the clinic has added 2,400 jobs in the past two years -- without state subsidies. That's roughly 12 times more jobs than what Dayton is trying to bring to Brooklyn Park at a cost of $15.4 million.

Those are numbers legislators should keep in mind as the DMC discussions continue in St. Paul.